MECS-Acimac, combining 30 years of expertise in the global ceramic industry and forecasting models, analyzed seven macro-geographical regions and their constituent countries. The report provides a five-year outlook on tile production and consumption values, as well as macroeconomic indicators, to better understand the market backgrounds.

01 Africa Leads in Growth, Asia Continues to Dominate

By the end of the five-year forecast period in 2026, the fastest-growing region will be Africa, with a compound annual growth rate of 6.6% in tile consumption and 7.3% in production. Non-EU Europe will be the only region experiencing a slight decline, largely influenced by the Russia-Ukraine conflict.

Asia will continue to dominate, accounting for nearly 70% of global tile production and consumption. The vast Asian region, excluding the Middle East (referred to as the Far East in the study), is projected to witness an increase of over 2 billion square meters in production (compound annual growth rate of 3.4%) and consumption (compound annual growth rate of 3.2%) over the five-year period. This growth is five times higher than that of Africa, where tile consumption in 2026 is expected to increase by only 451 million square meters compared to 2021.

02 Macroeconomic Factors and Fluctuating Energy and Raw Material Prices

The Russia-Ukraine conflict has intensified the long-term trend of rising prices for raw materials and energy since 2019.

Since the first quarter of 2022, energy prices have experienced unprecedented growth, slowing down the expected GDP growth after the recovery from the pandemic in 2021. TTF natural gas prices have fluctuated between 10 euros and 12 euros per megawatt-hour for years, peaking above 340 euros per megawatt-hour, then falling below 40 euros per megawatt-hour in early 2023. Crude oil prices have shown a similar trend, but the situation is steadily improving due to perceived geopolitical risks, slowing GDP growth, and reduced dependence of many European countries on Russian oil imports.

Furthermore, the increase in raw material and energy prices has fueled consumer price inflation (8.8% globally in 2022), amplifying the natural cyclical impact of economic growth. While core (non-energy) inflation issues are currently improving, the combination of low growth and monetary tightening continues to pose a high risk of pushing the global economy into a recession. In the presence of ongoing uncertainty surrounding the Ukraine conflict and the potential occurrence of a new financial crisis if some banks fail, leading to a contagion scenario similar to 2008, the situation would prove particularly severe.

In October 2022, the International Monetary Fund lowered its global economic growth forecast for 2023 to 2.7%, which was later revised up to 2.9% in January 2023. After a significant slowdown to 3% in 2022, China's GDP growth is expected to accelerate again this year, reaching between 5% and 5.2%. By 2023, China and India will account for half of global economic growth (with India expected to grow by 6.1%), while the United States and the Eurozone combined will only represent 10%.

03 Growth in Wealth, Consumer Spending Power, and Housing Construction

Tile consumption correlates positively with per capita wealth growth and consumer purchasing power. Broadly defining purchasing power as "consumption patterns" goes beyond more commonly used driving factors such as population growth and urbanization, which are necessary conditions but not sufficient to guarantee higher tile consumption.

04   Population Growth and Urbanization

Over the past decade, tile consumption has grown fastest in countries with strong population growth and high urbanization rates, although there are some exceptions to this trend. In some countries (such as Lithuania and Croatia), tile consumption has grown fastest outside major urban areas, while in others (such as Germany and France), consumption has declined despite high levels of urbanization.

The rate of global urbanization has exceeded population growth over the past 20 years (average annual urbanization growth rate of 2.1% compared to a population growth rate of 1.2%). Africa (3.7%) and Asia (2.6%) are the regions with the highest urbanization growth rates, which is expected to continue in the coming years.

In China, and even in Bangladesh and Vietnam, the proportion of the population living in urban areas is still significantly lower than in Western countries, while in Brazil, 87% of the population resides in urban areas, surpassing Italy and Germany. However, the forecast for urban population growth during 2022-2026 is expected to slow down compared to the previous two decades.

05 New Barriers and Restrictions in International Trade

Since 2022, the Ukraine conflict has been a major cause of instability in international trade patterns. The disruption in Ukrainian exports has not only affected ceramic raw material prices but also impacted the food supply to many developing countries, thereby influencing the purchasing power and consumption levels of these nations' populations.

Another source of instability relates to mid-term effects of the pandemic, including supply chain issues and rising logistics costs, which have, to some extent, contributed to a regression in trade globalization. One factor that could change the global trade landscape is China's policy of economic expansion through foreign direct investment, which, after a sharp acceleration in the past decade, is slowing down in Africa and other countries, although this situation may change in the near future.

All these factors contribute to increased uncertainty and inefficiencies in international trade in finished products, not accounting for implicit protectionism in the form of non-tariff trade barriers, including import quotas and embargoes.

Dr. Yin (Secretary General of Foshan Ceramic Industry Association)'s Commentary:

There is no denying that Acimac has the most comprehensive data on global ceramic tile production capacity and output (according to the Italian Association of Ceramic Machinery and Equipment Manufacturers). However, their prediction that the global ceramic tile market will grow by 3 billion square meters and reach a production volume of 21.5 billion square meters by 2026 seems highly unlikely. In reality, 3-5 years is a relatively short period of time, and it is possible to see the results in the blink of an eye. I believe that by 2026, there will be people who will remember that I thought it was highly improbable.

Let's first look at the data from Acimac's "World Ceramic Tile Production and Consumption Report" in recent years. From 2017 to 2021, the global ceramic tile production increased from 18.208 billion square meters to 18.339 billion square meters. In fact, the global ceramic tile production in 2018, 2019, and 2020 was all below 18 billion square meters, and one of the main reasons why the ceramic tile production exceeded 18 billion square meters in 2021 was that Acimac did not apply the data from the China Building Sanitary Ceramics Association, which reported China's ceramic tile production as 8.174 billion square meters (although Acimac used the data from the China Building Sanitary Ceramics Association for 2017-2020), but instead believed that China's ceramic tile production for that year was 8.863 billion square meters. Even so, the global ceramic tile production only increased by 110 million square meters from 2017 to 2021. How is it possible for it to grow by 3 billion square meters in the next five years and reach a global production volume of 21.5 billion square meters by 2026?

The main production of ceramic tiles in the world is concentrated in Asia, particularly in China, India, and Southeast Asia. It is evident that there is already an excess of ceramic tile production capacity and output in China, Vietnam, Indonesia, Thailand, Malaysia, and other regions, where the real estate market is either oversupplied or in a slump. Against this background, the development of ceramic tiles should be relatively steady and continuous. It is highly unlikely for there to be significant leaps or drastic declines in growth.